Implementation of the Scheme on “Accelerated development and deployment of solar water heating systems in domestic, industrial and commercial sectors” during 2005-2006

1.0 Objective

The main objectives of the scheme is to promote the widespread use of solar water heaters through a combination of financial and promotions incentives, and other support measures, with a goal of adding another one million sq.m. solar collector area through solar water heating systems in the next two years.

2.0 Physical targets

A target of installation of 300.000 sq.m. of collector area under the scheme has been kept for 2005 – 06, as per the following indicative breakup:

  • Domestic Sector : 200,000 sq.m
  • Institutional Sector : 50,000 sq.m.
  • Industrial / Commercial Sector : 50,000 sq.m.

The targets will be achieved by providing interest subsidy to the users of solar water heaters, incentive to motivators, support for organizing seminars/symposia / workshop / business meets / exhibitions, training programmes, publicity and awareness campaign, technology up gradation and studies /. Surveys, etc. Support will be also be provided to Municipalities / Municipal Corporations that adopt and notify the modifications to their building bye-laws for making the installation of solar – assisted water heating systems mandatory in certain categories of buildings.

3.0 Implementation Arrangements

The scheme will be implemented through IREDA and other Financial Institutions (FLs), Public Sector Banks and Co-operative Banks. The released of MNRE funds to Fls / banks will be managed by IREDA. Other promotional activities will be implemented by IREDA / State Nodal Agencies / Municipal Corporations / Technical Institutions / reputed NGOs, etc. The detailed guidelines for implementation of the scheme and financial provisions for various activities are given in the Annexure.

1. Interest Subsidy Scheme

1.1 Incentive to users

Soft-loans @ 2%to domestic users, 3% to Institutional users not available accelerated depreciation and 5% to industrial / commercial users availing depreciation will be available from Indian Renewable Energy Development Agency (IREDA), public/private sector banks, scheduled cooperative banks, RBI approved non-banking financing companies, intermediaries of IREDA (manufactures / suppliers) and other public / private financing institutions (Fls). The borrowers will be eligible for loan up to 85% of the cost of the systems, repayable over a period of five years. Water heating systems comprising of flat plate collectors (FPC) or Evacuated Tube Collectors (ETCs) would be eligible systems configurations for the loans. The manufacturers / suppliers of systems with FPCs should have approval from BIS and those of ETC from MNRE test centers.

1.2 Implementation

The scheme will be implemented through IREDA and other financial institutions / banks with release of funds to be managed by IREDA on behalf of MNRE IREDA in consultation with MNRE will develop a suitable mechanism for implementing the scheme with banks and other Fls. As regards banks already implementing the scheme, the existing MOUs signed with MNRE will continue over the designated period with required modifications as per this scheme. The funds released in advance to IREDA by MNRE based on a concrete plan received from them will be placed in a separate account in form of fixed deposits and the interest accrued at applicable rate will be credited in this account. A running account will also be maintained by IREDA to which the interest subsidy will be debited on the loan availed by the beneficiaries.

The interest subsidy (difference between the lending rate of bank / Fl and MNRE prescribed interest rate) calculated on up front basis for the entire loan period at a rate by MNRE & IREDA, will be released by IREDA to the Fls/ intermediaries / direct users on reimbursement basis after installation of the systems and submission of the necessary documents. To the public sector banks, advance release of subsidy may be considered subject to submission of a concrete plan of achieving the indicated target fixed by them. In such cases, these banks will also follow the procedure prescribed for IREDA for the purpose of maintaining the accounts.

The Fls / intermediaries of IREDA will maintain a complete list of beneficiaries with relevant details as regards installation of the systems, which will also be provided to IREDA. They will take necessary undertakings from beneficiaries and ensure that no MNRE support, in any form, had earlier been availed / will be availed in future on the installed systems from any financial institution/ bank. The accounts will be settled by IREDA with MNRE based on the requisite documents. IREDA and the banks / Fls will be provided service charges for implementing the scheme.

IREDA will also act as financial installation for providing loans to direct users and its intermediaries who may further on-lend to the users. Intermediaries will be eligible to get loans at 2% lower interest rate than the prescribed rates for various categories of users.

2.3 Support to Municipalities / Municipal Corporations.

A model Regulation / Building Byelaws for the installation of solar assisted water heating systems in certain categories of buildings has been circulated by the Ministry of Urban Development to all the States and Union Territories with a request to circulate the same to their local bodies for incorporating it in their building byelaws. The model regulation, when incorporated by the local bodies in their existing building byelaws, will make it mandatory for several categories of building including residential flats of certain minimum plinth area to have solar water heating systems.

A one-time grant @ Rs. 5 lakhs for municipalities and Rs. 10 lakhs for municipal corporations will be available for those that adopt and notify the modification pf their buildings byelaws making installation of solar assisted water heating systems mandatory in at least some categories of buildings in their respective areas as per the model Regulation / Building Bye-laws. The financial assistance provided by the Ministry is required to be utilized by the grantee organization for training, study tours, awareness creation, demonstration, preparation of brochures / manuals, creating infrastructures etc. for implementing the mandatory provisions.

In order to avail this grant, the Municipal corporations / Municipalities will be required to submit an application to the Ministry through the respective SNAs giving a tentative plan for utilizing the assistance along with a copy of the notification / order making used of solar assisted water heating system mandatory based on which MNRE will release the grant to respective Municipal corporation / Municipality.

2.5 Technology Up gradation and Exposure Visits Aboard

In order to promote technology up gradation in industry, soft loans will be made available to manufacturers at a reduced interest rate of 5% through IREDA. The interest subsidy up to a maximum of 6% calculated on up front basis will be borne by MNRE. The loans will be provided only for projects involving advanced and new technologies, which would lead to lower costs of production, improved performance and reliability of the products, etc. In addition, visits aboard by industry delegations, including participation in efficient manufacturing techniques, will be supported through partial financial assistance on case-by-case basis.

2.6 Studies, Surveys, etc.

To promote the spread of proven technologies and induction of new technologies, financial assistance will be provided for technology assessment, potential assessment, performance surveys, cost – benefit analysis, environmental impact assessment, consultancy development, market and export development, date base development and management, monitoring and evaluation, etc. The support will be limited to Rs. 5 lakhs per project to be provided on case-by-case basis. The proposals could be submitted by SNAs / Technical Institutions / reputed NGOs / Manufacturers Associations, etc.

3. Release of Funds of IREDA

3.1 Release of funds to IREDA

Based on the requests received, advance released will be made to IREDA towards interest subsidy, service charges, incentives to motivators, support to SNA, etc. in a phased manner after apportioning the overall targets suitably. The accounts will be settles with IREDA based on the progress report, audited statement of expenditure, and utilization certificate received in the prescribed formals.

3.2 Release of funds for other activities

80% of the funds sanctioned will be released in advance to the implementing agencies for executing the activities. The balance funds will be released along with settlement of accounts based on audited statement of expenditure and utilisation certificate in the prescribed formats along with a details report.